EUR/USD Hour Chart: Undergoing Distribution

EUR/USD

Dynamic trend: Down

Background: W1 – weak; D1 – neutral

Phase: Distribution

EUR/USD Hour Chart

In point 1 there was Buying Climax on high volume. The next bar was a down bar, which showed selling by the smart money.

In point 2 there was an Up- thrust. If the spread is narrow (as in this case), then the value of this signal is not great, but taking into account the weakness in the point 1 and the previous up-bar with a large volume and a narrow spread, it informs us that the supply has probably overcome demand.

In point 3 there was a top reversal bar. Maximum of the down-bar above the high of the up-bar, but the volume lower, indicating weakness.

In point 4 more reversal bars, with VSA signaling supply.

Selling on the distribution phase is risky, since the market doesn’t have any clear direction and is prone to shake-outs of the highs.

Suggested Strategies

Consider selling using a sell-stop order when «No Demand» bar appears (riskier). Or a sell-stop order when the price breaks down 1.1130 and «No Demand» bar will appear (less risky).

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